Correlation Between UGI and Towngas China
Can any of the company-specific risk be diversified away by investing in both UGI and Towngas China at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining UGI and Towngas China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corporation and Towngas China, you can compare the effects of market volatilities on UGI and Towngas China and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in UGI with a short position of Towngas China. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI and Towngas China.
Diversification Opportunities for UGI and Towngas China
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UGI and Towngas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp. and Towngas China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towngas China and UGI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on UGI Corporation are associated (or correlated) with Towngas China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towngas China has no effect on the direction of UGI i.e., UGI and Towngas China go up and down completely randomly.
Pair Corralation between UGI and Towngas China
If you would invest 2,394 in UGI Corporation on September 12, 2024 and sell it today you would earn a total of 470.00 from holding UGI Corporation or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UGI Corp. vs. Towngas China
Performance |
| Timeline |
| UGI Corporation |
| Towngas China |
UGI and Towngas China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI and Towngas China
The main advantage of trading using opposite UGI and Towngas China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI position performs unexpectedly, Towngas China can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Towngas China will offset losses from the drop in Towngas China's long position.The idea behind UGI Corporation and Towngas China pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Towngas China vs. UGI Corporation | Towngas China vs. NewJersey Resources | Towngas China vs. Chesapeake Utilities | Towngas China vs. NiSource |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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